DCIT 10(2), MUMBAI V. OLEOFINE ORGANICS (I) P.LTD, MUMBAI

ITA 3584/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8363 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K K VED
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ./I.T.A. NO.3584/M/2013 ( AY: 2009 - 2010 ) DCIT 10(2), R.NO.432, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20. / VS. M/S. OLEOFINE ORGANICS (INDIA) PVT LTD., 101/A, FINE HOUSE, ANANDJI LANE, GHATKOPAR (E), MUMBAI - 77. ./ PAN : AAACO1362Q ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MOHIT JAIN / RESPONDENT BY : SHRI K.K. VED / DATE OF HEARING :13.8.2014 / DATE OF PRONOUNCEMENT :22 .8.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 7.5.2013 IS AGAINST THE ORDER OF THE CIT (A) - 21, MUMBAI DATED 4.3.2013 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITIONS MADE BY THE AO U/S 80IB(3). 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN HOLDING THAT THE TEST OF ELIGI BILITY TO SECTION 80IB / 80IA IS TO BE DETERMINED IN THE INITIAL ASSESSMENT YEAR AND ONCE THE INDUSTRIAL UNDERTAKING FULFILS ALL THE PRESCRIBED CONDITIONS IN FIRST YEARS, IT BECOMES ELIGIBLE TO CLAIM DEDUCTION FOR A TOTAL TAX HOLIDAY PERIOD OF TEN YEARS . 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING, IMPORTING AND EXPORTING OF CHEMICALS EMULSIFIERS ETC. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 8,58,04,905/ - AFTER CLAIMING DEDUCTION OF RS.3,76,95,972/ - U/S 80IB(3) OF THE ACT. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 12,35,00,877/ - . DURING THE ASSESSMENT, AO DISALLOWED THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB(3) BY HOLDING THAT THE 2 ASSESSEE DOES NOT COME UNDER THE PURVIEW OF SMALL SCALE INDUSTRIAL (SSI) UNDERTAKING I N T H E Y E A R U N D E R C O N S I D E R A T I O N AS THE VALUE OF ITS PLANT AND MACHINERY EXCEEDS RS. 1 CRS AND THEREFORE, T HE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(3) OF THE ACT. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) ALLOWED THE APPEAL. WHILE ALLOWING THE ASSESSEES APPEAL CIT (A) RELIED ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PAUL BROS . REPORTED IN 79 TAXMANN 370 (BOMBAY) AND THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE O F SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LIMITED VS. CIT, 123 ITR 669 (GUJ) FOR THE PROPOSITION THAT WHERE THE RELIEF IS GRANTED IN THE EARLIER YEARS, THE ASSESSEES CLAIM FOR THE SUBSEQUENT YEARS CANNOT BE REJECTED ON THE SAME GROUND WITHOUT WITHDRAWIN G THE RELIEF FOR THE EARLIER ASSESSMENT YEARS . PARA 3.5 OF THE CIT (A)S ORDER IS RELEVANT IN THIS REGARD. AGGRIEVED WITH THE DECISION OF THE CIT (A), REVENUE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 5. DURING THE PROCEEDINGS BEFORE US, SHRI K.K. VED, LD COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT (A) . FURTHER, LD COUNSEL FILED A COPY OF THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF M/S. ACE MULTI AXES SYSTEMS LTD VS. DCIT VIDE ITA NO.477 OF 2013, DATED 28.7.2014, WHICH IS FOUND TO BE VERY AKIN TO THE FACTS OF THE PRESENT CASE AND THE SAID JUDGMENT IS RELEVANT FOR THE PROPOSITION THAT A LITERAL INTERPRETATION OF A PROVISION WAS NOT NECESSARY IN MATTERS OF GRANTING DEDUCTION U/S 80IB TO A SMALL SCALE INDUSTRY, WHICH FINALLY PROSPERED INTO BIGGER COMPANY . 6. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED JUDGMENTS OF THE HIGHER JUDICIARY. THE ISSUE FOR ADJUDICATION RELATES TO IF THE ASSESSEE BE DENIED DEDUCTION U/S 80IB(3) IN SUBSEQUENT YEARS AS THE ASSESSEE F R O M I N V E S T M E N T P O I N T O F V I E W , MATURES OUT OF SSI DEFINITION, WHEN THE ASSESSEE IS A SSI IN THE INITIAL YEARS OF DEDUCTION. ON PERUSAL OF TH E CITED JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF M/S. ACE MULTI AXES SYSTEMS LTD (SUPRA), WE FIND THE CONTENTS OF PARA 5 OF THE SAID JUDGMENT ARE RELEVANT IN THIS REGARD WHICH READ AS UNDER: 5IF SUCH A LITERAL INTERPRETATION IS PLA CED ON THE SAID PROVISION, IT WOULD RUN COUNTER TO THE VERY OBJECT OF GRANTING INCENTIVES. IT WOULD KILL THE INDUSTRY. 3 THEREFORE, KEEPING IN MIND THE OBJECT WITH WHICH THESE PROVISIONS ARE ENACTED, KEEPING IN MIND THE INDUSTRIAL GROWTH WHICH IS REQUIRED TO BE ACHIEVED, IF TWO INTERPRETATIONS ARE POSSIBLE, THE COURTS HAVE TO LEAN IN FAVOUR OF EXTENDING THE BENEFIT OF DEDUCTION TO AN ASSESSEE WHO HAS AVAILED THE OPPORTUNITY GIVEN TO HIM UNDER LAW AND HAS GROWN IN HIS BUSINESS. THEREFORE, WE ARE OF THE VIEW , IF A SMALL SCALE INDUSTRY, IN THE COURSE OF 10 YEARS, STABILIZES EARLY, MAKES FURTHER INVESTMENTS IN THE BUSINESS AND IT RESULTS IN ITS GOING OUTSIDE THE PURVIEW OF THE DEFINITION OF A SMALL SCALE INDUSTRY, THAT SHOULD NOT COME IN THE WAY OF ITS CLAIMI NG BENEFIT UNDER SECTION 80IB FOR 10 CONSECUTIVE YEARS, FROM THE INITIAL ASSESSMENT YEAR. 8. THERE IS NO DISPUTE ON THE FACT THAT THE ASSESSEE IS A SSI IN THE INITIAL YEARS. IT IS PROSPERED AND I S NO LONGER A SSI. FURTHER, THE ASSESSEE WAS GIVEN BENEFIT OF DEDUCTION U/S 80IB(3) OF THE ACT IN EARLIER YEARS. UNDER THESE FACTS, WE FIND THE ABOVE JUDG MENT IN THE CASE OF M/S. ACE MULTI AXES SYSTEMS LTD (SUPRA), HAS APPLICABILITY TO THE PRESENT ISSUE. FROM THE ABOVE SETTLED POSITION OF THE ISSUE, WE ARE OF THE OPINION THAT THE CIT (A) HAS RIGHTLY ADJUDICATED THE ISSUE UNDER CONSIDERATION WHILE GRANTING THE RELIEF TO THE ASSESSEE. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDE R PRON OUNCED IN THE OPEN COURT ON 2 2 N D AUGUST, 2014. S D / - S D / - (AMIT SHUKLA) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 2 2 /08/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . 4 //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI